Tower 570 Company LP v. Affiliated FM Insurance Company et al
OPINION AND ORDER. The Court grants in part and denies in part AFM's motion to compel. Within one week of the date of this Opinion and Order, Tower 570 shall produce to AFM any and all documents that the Court has found must be produced. By t he same date, Tower 570 shall file on the public docket the chart that was previously filed ex parte at ECF No. 72. Additionally, the parties shall promptly meet and confer and attempt, in light of this Opinion and Order, to settle any outstanding disputes with respect to other documents withheld by Tower 570 without the need for further intervention by the Court. In the event that a dispute remains, either party may raise it with the Court in accordance with the procedures for discovery disputes set forth in the Court's Individual Rules and Procedures. SO ORDERED. (Signed by Judge Jesse M. Furman on 4/1/21) (yv)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
TOWER 570 COMPANY LP,
AFFILIATED FM INSURANCE COMPANY,
OPINION AND ORDER
JESSE M. FURMAN, United States District Judge:
On May 20, 2019, an “energy event” — involving the release of energy into an electric
vault — caused significant damage to 570 Lexington Avenue in Manhattan. ECF No. 42, ¶¶ 2,
23, 29-30. Thereafter, Tower 570 Company LP (“Tower 570”), the limited partnership that owns
570 Lexington Avenue, brought this suit against Affiliated FM Insurance Company (“AFM”)
and Travelers Property Casualty Company of America (“Travelers”), its insurers, seeking
coverage for its loss. Now pending is AFM’s motion to compel the production of documents
that Tower 570 and (at Tower 570’s direction) non-parties Goldman Copeland Consulting
Engineers (“Goldman Copeland”) and Universal Management and Contract, Inc. (“Universal”)
have withheld on the basis of the attorney-client privilege and the work product doctrine.1 For
the reasons stated below, the motion is GRANTED in part and DENIED in part.
Travelers joined AFM in filing the motion to compel, see ECF No. 56, but Tower 570
and Travelers have since settled their dispute, see ECF No. 80.
The following background facts are drawn from documents submitted by the parties in
connection with AFM’s motion, including a declaration of Andrew Ratner, who is employed by
an affiliate of Tower 570’s parent organization and, in that capacity, oversees the management of
570 Lexington Avenue. See ECF No. 65-5 (“Ratner Decl.”). Tower 570 characterizes Ratner as
a “key decision-maker” in the relevant matters. ECF No. 65 (“Pl.’s Br.”), at 5 n.6; see also ECF
No. 74 (“Pl.’s Reply”), at 5.
The energy event on May 20, 2019, caused serious damage to 570 Lexington Avenue,
including the destruction of a fifty-story electrical riser, extensive damage to the electrical vault,
and the release of asbestos into the surrounding area. Ratner Decl. ¶¶ 8-9. Shortly thereafter,
Tower 570 asked Goldman Copeland to perform a cause-and-origin analysis of the event. Id.
¶ 14. On June 7, 2019, John McBride of Goldman Copeland issued a report (the “McBride
Report”), a copy of which was produced to AFM in connection with Tower 570’s insurance
claim. ECF No. 75 (“Def.’s Reply”), at 5-6; see ECF No. 64-8. On June 25, 2019, Travelers
notified Tower 570 by email that it was partially denying coverage for the loss. See ECF No. 643. On September 11, 2019, AFM notified Tower 570 that it was denying coverage for the
entirety of the loss. See ECF No. 64-6, at 4.
This lawsuit followed not long after. See ECF No. 1. On January 21, 2021, AFM filed a
letter motion seeking the production of documents withheld by Tower 570 (or, at Tower 570’s
direction, by third parties Goldman Copeland and Universal) on the basis of attorney-client
privilege and work product doctrine. ECF No. 56. The Court concluded that it would be “unable
to resolve the parties’ dispute . . . on the basis of the letters” alone, see ECF No. 58, and thus
directed the parties to submit additional briefing as well as “a representative sampling” of the
documents at issue, to be selected by AFM, for in camera review. ECF No. 61. In response,
AFM selected eighty-four documents, seven of which — namely, Documents 390-91, 396-97,
398-99, and 412 — Tower 570 concedes are not entitled to protection and has agreed to produce.
Pl.’s Br. 4 n.4. Tower 570 has submitted the other seventy-seven to the Court for its review.
APPLICABLE LEGAL PRINCIPLES
As noted, Tower 570 invokes the protections of the attorney-client privilege or the work
product doctrine (and, in a few instances, both). The Court will describe each in turn.
A. Attorney-Client Privilege
In the Second Circuit, “[t]he attorney-client privilege protects communications
(1) between a client and his or her attorney (2) that are intended to be, and in fact were, kept
confidential (3) for the purpose of obtaining or providing legal assistance.” Brennan Ctr. for
Justice at N.Y. Univ. Sch. of Law v. D.O.J., 697 F.3d 184, 207 (2d Cir. 2012) (internal quotation
marks omitted); see In re Gen. Motors LLC Ignition Switch Litig., 80 F. Supp. 3d 521, 526-31
(S.D.N.Y. 2015). The privilege, however, attaches only if “the predominant purpose of the
communication is to render or solicit legal advice.” Pritchard v. County of Erie (In re the
County of Erie), 473 F.3d 413, 420 (2d Cir. 2007). Thus, a document which is “predominantly a
business communication” is not protected merely because it “involved legal considerations” and
“counsel was copied.” LSH Co. v. AXA Equitable Life Ins. Co., No. 18-CV-2111 (JMF), 2019
WL 10947152, at *1 (S.D.N.Y. Aug. 26, 2019) (internal quotation marks omitted); see also
Mazzocchi v. Windsor Owners Corp., No. 11-CV-7913 (RA) (SDA), 2020 WL 4038342, at *1
(S.D.N.Y. July 17, 2020) (“[Merely] including an attorney . . . as a ‘cc’ to the emails does not
make the communications privileged.”); LPD N.Y., LLC v. Adidas Am., Inc., No. 15-CV-6360
(MKB), 2018 WL 6437078, at *5 (E.D.N.Y. Dec. 7, 2018) (“That attorneys were copied on
communications between business personnel does not, by itself, entitle the communications to
protection.”); Gen. Motors LLC Ignition Switch Litig., 80 F. Supp. 3d at 529-31. Further, the
privilege may be waived by voluntary disclosure of an otherwise privileged communication to a
third party. See, e.g., AU New Haven, LLC v. YKK Corp., No. 15-CV-3411 (GHW) (SN), 2016
WL 6820383, at *2 (S.D.N.Y. Nov. 18, 2016).
B. Work Product Doctrine
Protection of work product is based on the notion that “it is essential that a lawyer work
with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their
counsel. Proper preparation of a client’s case demands that he assemble information, sift what
he considers to be the relevant from the irrelevant facts, prepare his legal theories and plan his
strategy without undue and needless interference.” Hickman v. Taylor, 329 U.S. 495, 510-11
(1947). The Supreme Court’s decision in Hickman, which recognized the doctrine, has since
been codified in Rule 26(b)(3) of the Federal Rules of Civil Procedure, which provides that
“[o]rdinarily, a party may not discover documents and tangible things that are prepared in
anticipation of litigation or for trial by or for another party or its representative.” Notably, “it is
not . . . necessary that the material be prepared by or at the direction of an attorney”; instead, “the
rule affords protection to materials gathered by non-attorneys even where there was no
involvement by an attorney.” Parneros v. Barnes & Noble, Inc., 332 F.R.D. 482, 492 (S.D.N.Y.
2019) (cleaned up). Moreover, while disclosure to a third party results in waiver of the attorneyclient privilege, it does not necessarily result in waiver of work product protection. Instead, a
waiver of the latter “will be found only if the party has voluntarily disclosed the work-product in
such a manner that it is likely to be revealed to his adversary. Thus, disclosure simply to another
person who has an interest in the information but who is not reasonably viewed as a conduit to a
potential adversary will not be deemed a waiver . . . .” Bowne of N.Y.C., Inc. v. AmBASE Corp.,
150 F.R.D. 465, 479 (S.D.N.Y. 1993).
Courts take “a flexible approach in determining whether the work product doctrine is
applicable, asking not whether litigation was a certainty, but whether the document was created
‘with an eye toward litigation.’” A. Michael’s Piano, Inc. v. F.T.C., 18 F.3d 138, 146 (2d Cir.
1994) (quoting Hickman, 329 U.S. at 511). As the Second Circuit has noted, “[n]othing” in Rule
26(b)(3) “states or suggests that documents prepared ‘in anticipation of litigation’ with the
purpose of assisting in the making of a business decision do not fall within its scope.” United
States v. Adlman, 134 F.3d 1194, 1198-99 (2d Cir. 1998). Indeed, “a requirement that
documents be produced primarily or exclusively to assist in litigation in order to be protected is
at odds with the text and the policies of the Rule. Nowhere does Rule 26(b)(3) state that a
document must have been prepared to aid in the conduct of litigation in order to constitute work
product, much less primarily or exclusively to aid in litigation. Preparing a document ‘in
anticipation of litigation’ is sufficient.” Id. at 1198 (emphases added and omitted). Thus, courts
in this Circuit “ask whether the document at issue was created ‘because of’ anticipated litigation,
rather than if the document was ‘created primarily to assist in litigation.’” United States v. Petit,
438 F. Supp. 3d 212, 214 (S.D.N.Y. 2020) (quoting Adlman, 134 F.3d at 1195); accord Gen.
Motors LLC Ignition Switch Litig., 80 F. Supp. 3d at 531-32.2
Unlike the attorney-client privilege, which is absolute, the work product doctrine is only
qualified. See United States v. Nobles, 422 U.S. 225, 239 (1975); Gen. Motors LLC Ignition
Switch Litig., 80 F. Supp. 3d at 532-33. AFM, however, has not argued that it is entitled to the
documents in question on that basis, and has thus forfeited any such argument. See, e.g., In re
Gen. Motors LLC Ignition Switch Litig., 477 F. Supp. 3d 170, 192 n.15 (S.D.N.Y. 2020).
A. AFM’s General Arguments
Several of AFM’s categorical arguments can be swiftly rejected. First, AFM objects to
invocation of the attorney-client privilege as to certain communications that included or were
copied to third parties. ECF No. 64 (“Def.’s Br.”), at 9-10. But see Def.’s Reply 3 n.2. It is well
established, however, that the inclusion of a third party on a communication does not vitiate or
waive the privilege if the third party is an agent of the client and the client shows that (1) it “had
a reasonable expectation of confidentiality under the circumstances” and (2) the disclosure “was
necessary for the client to obtain informed legal advice.” Nat’l Educ. Training Grp., Inc. v.
Skillsoft Corp., No. M8-85 (WHP), 1999 WL 378337, at *3-4 (S.D.N.Y. June 10, 1999) (internal
quotation marks omitted); see also MBIA Ins. Corp. v. Countrywide Home Loans, Inc., 941
N.Y.S.2d 56, 58 (1st Dep’t 2012) (noting that “the attorney-client privilege . . . extend[s] to
documents generated by consultants retained by counsel to assist in analyzing or preparing for
anticipated litigation” (internal quotation marks omitted)). Here, given the technical nature of
the issues, that provides a basis to protect at least some communications involving Tower 570’s
construction managers (employees of Universal), its public adjustor (John Panico of Affiliated
Adjustment Group, Ltd.), and its engineer (McBride). See Nat’l Educ. Training Grp., 1999 WL
378337, at *4 (noting that the “‘necessity’ element” is satisfied where the third party “serve[s]
some specialized purpose in facilitating the attorney-client communications”).
Second, citing “an internal email” between Ratner and his personal assistant, AFM
contends that Tower 570 has improperly invoked the attorney-client privilege over certain
communications that did not include counsel. Def.’s Br. 9; see Pl.’s Reply 5. The privilege is
indeed meant to protect communications between a client and his, her, or its attorney.
Nevertheless, in the corporate setting, courts have held that the “intra-corporate distribution of
legal advice received from counsel does not necessarily vitiate the privilege, even though the
legal advice is relayed indirectly from counsel through corporate personnel.” Nat’l Educ.
Training Grp., 1999 WL 378337, at *3 (citing cases); accord AU New Haven, 2016 WL
6820383, at *2; Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437, 442
(S.D.N.Y. 1995). “This follows from the recognition that since the decision-making power of
the corporate client may be diffused among several employees, the dissemination of confidential
communications to such persons does not defeat the privilege.” Bank Brussels Lambert, 160
F.R.D. at 442. Thus, the mere fact that some of the communications at issue were between or
among Tower 570 employees, and did not include counsel, does not mean that those
communications are subject to disclosure.
Third, AFM asserts that the work product doctrine is categorically inapposite for any
document predating June 25, 2019 — the date on which Travelers notified Tower 570 that it
would be partially denying coverage of the loss — because Tower 570 “could not have
anticipated litigation” until it was notified that its claim was being partially or wholly denied.
Def.’s Br. 1, 6. Any document prepared before that date, AFM maintains, was merely made in
“the ordinary course of [Tower 570’s] business.” Id. at 6-7. In support of this argument, AFM
cites authority for the proposition that, “[i]n the insurance context, it is generally recognized that
an ‘anticipation of litigation’ privilege is deemed triggered when a determination has been made
to reject coverage.” Id. at 6; see Bombard v. Amica Mut. Ins. Co., 783 N.Y.S.2d 85, 86 (2d Dep’t
2004); Landmark Ins. Co. v. Beau Rivage Rest., Inc., 509 N.Y.S.2d 819, 822 (2d Dep’t 1986).
But this argument fails as a matter of both law and fact. For starters, as a matter of law, the
authority AFM cites is New York law. But it is federal law, not state law, that “governs the
applicability of the work product doctrine in all actions in federal court.” Weber v. Paduano, No.
02-CV-3392 (GEL), 2003 WL 161340, at *3 (S.D.N.Y. Jan. 22, 2003) (Lynch, J.). Moreover,
even if New York state law did apply, the rule that AFM invokes — that a party anticipates
litigation only once an insurance claim has been denied — applies to insurers such as AFM, not
to insureds such as Tower 570. See Bombard, 783 N.Y.S. 2d at 86 (“[T]he payment or rejection
of claims is a part of the regular business of an insurance company. Consequently, reports which
aid it in the process of deciding which of the two indicated actions to pursue are made in the
regular course of its business.” (internal quotation marks omitted) (emphases added)).
And as a matter of fact, Tower 570 provides ample evidence that it did indeed anticipate
litigation before receiving Travelers’s June 25, 2019 partial denial. Significantly, Tower 570
began consulting with external litigation counsel (the same firm that represents it in this case) as
early as June 3, 2019, Ratner Decl. ¶ 22, and each document at issue in the present dispute was
drafted on or after that date, see generally ECF No. 65-6. What’s more, Tower 570 provides
evidence that, as early as May 31, 2019, it believed that Consolidated Edison of New York
(“Con-Ed”) was wrongly denying ownership of the electrical riser at issue and “refusing to
accept responsibility for the environmental remediation,” leading Tower 570 to believe that
litigation might be necessary against Con-Ed. Ratner Decl. ¶¶ 18-19.3 And on June 21, 2019,
Tower 570’s public adjustor wrote an email noting that “the property and [Travelers] are looking
AFM suggests that anticipated litigation against Con-Ed should have no bearing on the
applicability of the work product doctrine in this case because Con-Ed is not a party to the
present suit, see Def.’s Reply 4-5, but that suggestion is easily rejected, see, e.g., Montesa v.
Schwartz, No. 12-CV-6057 (CS) (JCM), 2016 WL 3476431, at *9 (S.D.N.Y. June 20, 2016)
(finding a document protected “despite the fact that th[e] work product [wa]s actually in
anticipation of different litigation than the case at bar”); Ramsey v. NYP Holdings, Inc., No. 00CV-3478 (VM) (MHD), 2002 WL 1402055, at *7 n.6 (S.D.N.Y. June 27, 2002) (“[A] party may
withhold in one lawsuit the work product that it has created or caused to be created because of
another lawsuit in which it has been involved or anticipates being involved . . . .”).
at [each] other for coverage.” ECF No. 65-3. In short, it is plain that Tower 570 anticipated
litigation before June 25, 2019, and thus, contrary to AFM’s assertions, the work product
doctrine may well protect documents that were created prior to that date.
B. Document-by-Document Analysis
With that, the Court turns to the particular documents at issue. Unfortunately, the Court’s
task has been complicated by what appear to be errors throughout Tower 570’s privilege log (or
the filenames and Bates stamps of the documents submitted for in camera review, or both). ECF
No. 65-6; see also ECF No. 72. For example, the log identifies Documents 359 and 360 as work
product consisting of communications involving John McBride, Tracy McBride, and Chris
McBride. ECF No. 65-6, at 11. But neither document fits that description; instead, Document
361 does. Additionally, Documents 358, 359, 360, 364, 365, 421, 423, 425, and 453 are merely
logos or similar images and contain no substantive content. The notion that they are protected by
the attorney-client privilege or work product doctrine is so preposterous that one must wonder
whether the documents were perhaps mislabeled. AFM, lacking access to the documents
themselves, cites the documents by reference to the information provided in the privilege log;
thus, references in AFM’s briefing to particular documents may also be off. To the extent
possible, the Court has tried to locate the documents referenced by AFM and evaluate any
document-specific objections that AFM has raised.
1. Documents Relating to the McBride Report
The Court begins with documents relating to the McBride Report, which make up the
largest bloc of the documents at issue. Once again, some of AFM’s arguments can be quickly
dismissed. AFM argues first that, because it was given both a final copy of the McBride Report
and what appears to be an earlier version dated May 24, 2019, see ECF No. 64-9, other, non-
disclosed drafts of the Report cannot be work product or — alternatively — that any privilege
has been waived. Def.’s Br. 7; Def.’s Reply 5-6. The Court disagrees. As Rule 26(b)(4)(B) of
the Federal Rules of Civil Procedure makes plain, the mere disclosure of a final report does not
render drafts subject to disclosure. See Fed. R. Civ. P. 26(b)(4)(B) (“Rules 26(b)(3)(A) and (B)
protect drafts of any report or disclosure required under Rule 26(a)(2) . . . .”); see also, e.g., Inst.
for Dev. of Earth Awareness v. People for Ethical Treatment of Animals, 272 F.R.D. 124, 125
(S.D.N.Y. 2011). And disclosure of an early draft is not inconsistent with the non-disclosure of
later drafts as to which Tower 570 sought legal advice, particularly where, as here, the later
drafts were created a week or more later, and are substantially more developed, than the
disclosed draft. Finally, contrary to AFM’s contentions, the Court easily concludes that the
McBride Report was prepared in anticipation of litigation and that earlier versions are therefore
protected work product. Tower 570 provides evidence that it “requested . . . [the] cause and
origin analysis so that [it] could develop an understanding as to the origin of the loss and nature
of the damage and pursue coverage through litigation” if necessary. Ratner Decl. ¶ 14. The
relevant drafts, dated June 5, 2019, or later, were each prepared after Tower 570 began
consulting external litigation counsel, and the Court’s in camera review of the documents and
communications confirms that counsel was consulted in the process of preparing the drafts.
More specifically, the Court rules with respect to the McBride Report documents as
Documents 108, 145, 208, 210, 221, 344, 347, 367, 422, 426, and 429 are draft versions
of the McBride Report and are protected work product.
Documents 107, 144, 207, 209, 220, 366, 368, 369, 419, 420, 424, and 428 are email
communications accompanying the McBride Report for which Tower 570 seeks work
product protection. The Court finds that these emails are covered by the same work
product protections as the draft reports themselves.
Documents 105, 106, 110, 114, 180, 181, 183, 184, 189, 190, 213, 276, 291, 302, 303,
343, 345, 349, 350, 351, 352, 353, 354, 355, 356, 357, and 405 contain email
communications pertaining to the McBride Report, on which counsel was copied.
Although the question is a close one, the Court concludes based on its in camera review
that the emails were created for the purposes of obtaining or providing legal advice.
Accordingly, they are protected by the attorney-client privilege.
Documents 117, 205, and 346 are communications relating to the McBride Report on
which counsel was merely copied, but neither the communications themselves nor Tower
570’s submissions establish that they were for the purpose of seeking or providing legal
advice. Accordingly, these documents are not covered by the attorney-client privilege —
which is the sole basis Tower 570 advances for withholding them — and must be
Document 361 is an email from McBride urging the recipients — who are not employed
by any relevant party here — to “[s]ee . . . what [he] do[es] in the course of a day.” The
email appears to have included as an attachment a version of the McBride Report. The
email is certainly not protected by the attorney-client privilege — the sole basis on which
Tower 570 claims protection — as the recipients are not related to Tower 570 or to its
counsel. Nor is the email itself work product (though the attached report itself may be).
Thus, the email must be produced.
2. Other Documents
With respect to the remaining documents at issue, the Court rules as follows:
Documents 116 and 123 involve messages forwarded to counsel. Although the original
messages did not include attorneys (and thus are presumably subject to disclosure in their
own right), it is evident from the face of the documents that the messages were forwarded
to counsel for the purpose of seeking legal advice. These communications are, therefore,
protected by the attorney-client privilege.
Documents 284 and 297 involve communications between non-lawyers for business
purposes, but which were subsequently forwarded to Tower 570’s counsel. Again, the
underlying communications are presumably subject to disclosure in their own right.
Regardless, Tower 570 fails to establish that these messages were sent for the purpose of
obtaining or providing legal advice. Accordingly, they are not protected attorney-client
communications and must be produced.
Some of these documents appear to be duplicates of others as to which Tower 570
properly invoked work product protection. Compare, e.g., Document 346 (withheld on the basis
of attorney-client privilege), with Document 144 (withheld on the basis of the work product
doctrine). Whether that is a result of error or oversight, it does not change the fact that Tower
570 invokes only the attorney-client privilege and, thus, has forfeited any work product
Document 273 is an email thread originally authored by Tower 570’s public adjustor.
Although counsel is copied on the communications, there is no indication that that was
done for the purpose of obtaining or providing legal advice. Accordingly, this document
must be produced.
Document 285 is an email thread, on which counsel is copied, conveying executed forms
to be filed with Tower 570’s claim. Once again, Tower 570 fails to establish that the
email was sent for the purpose of obtaining or providing legal advice. Accordingly, it is
not a protected attorney-client communication and must be produced.
Documents 341 and 342 are attorney-client communications that were made for the
purposes of obtaining or providing legal advice and are thus protected.
Document 348 is a calendar invitation for a conference call and contains no substantive
information. There is no basis to claim work product protection for this document, and it
must therefore be produced.
Document 413 is a set of electrical floor plans and diagrams for 570 Lexington Avenue.
There is no indication that this document was made in anticipation of litigation, so it is
not protected under the work product doctrine. Moreover, the document is in the same
family as Document 412, which Tower 570 conceded was not protected. Accordingly, it
too must be produced.
Documents 452, 454, 455, and 456 are a series of estimates and schedules for repairs,
dated around July 23, 2019. There communications do not appear to have involved
counsel, and Tower 570 fails to establish that they were “created ‘because of’ anticipated
litigation.” Petit, 438 F. Supp. 3d at 214. Accordingly, they must be produced.
Documents 358, 359, 360, 364, 365, 421, 423, 425, and 453 are, as noted, merely
standalone logos or similar images and lack any substantive content. There is no valid
basis to withhold these documents, and they must be produced.
For the foregoing reasons, the Court grants in part and denies in part AFM’s motion to
compel. Within one week of the date of this Opinion and Order, Tower 570 shall produce to
AFM any and all documents that the Court has found must be produced. By the same date,
Tower 570 shall file on the public docket the chart that was previously filed ex parte at ECF No.
72. Additionally, the parties shall promptly meet and confer and attempt, in light of this Opinion
and Order, to settle any outstanding disputes with respect to other documents withheld by Tower
570 without the need for further intervention by the Court. In the event that a dispute remains,
either party may raise it with the Court in accordance with the procedures for discovery disputes
set forth in the Court’s Individual Rules and Procedures.
Dated: April 1, 2021
New York, New York
JESSE M. FURMAN
United States District Judge
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